Mutual funds focusing on defensive stocks — health care and consumer staples — were among the few winning categories of funds...
NEW YORK — Mutual funds focusing on defensive stocks — health care and consumer staples — were among the few winning categories of funds during the third quarter as more turbulence swept across Wall Street and left investors with shrinking portfolios.
Preliminary figures through Thursday from fund tracker Lipper Inc. show that the worst performers in the July-to-September period were funds focused on companies dealing in commodities. These funds left investors with large losses as the price of crude oil, gold and other commodities tumbled. The quarter ends Tuesday.
“We saw a rotation here,” said Tom Roseen, senior research analyst at Lipper. “What was hot is not.”
Health-care and consumer-goods funds showed gains as investors placed bets that these areas likely would suffer less in an economic slowdown than parts of the economy that depend or robust consumer spending.
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Health and biotechnology funds had a return of 2.97 percent for the quarter, up from 1.33 percent in the second quarter. Likewise, global health and biotechnology funds eked out a 0.61 percent return, down from 1.51 percent in the second quarter.
Investors also looked to put money into areas that consumers need, not optional purchase that shoppers might forgo in a difficult economy.
Consumer-goods funds had a return of 3.91 percent in the quarter after seeing a negative return of 8.90 percent last quarter.
And investors who put money into overinflated sectors took a hit. Commodities funds logged a negative return of 21.3 percent for the quarter after enjoying a 19.51 percent return in the second quarter. The same occurred with gold funds; negative returns totaled 25.6 percent for the quarter, compared with a return of 3.43 percent in the second quarter.
Natural-resources funds saw a negative return of 26.6 percent compared with a return of 24.5 percent last quarter. Meanwhile, global natural-resources funds posted a negative return of 26.1 percent; last quarter, they had a return of 18.2 percent.
A broad pullback in commodities occurred after investors worried that an economic slowdown would weaken demand for materials. Gold peaked in mid-March at more than $1,000 an ounce, while crude-oil prices hit their high of $147.27 in mid-July.
With two sessions to go, the Dow Jones industrial average is down 1.82 percent for the quarter. And the broader Standard & Poor’s 500 index — the yardstick for evaluating many mutual funds — is down 5.21 percent. The Nasdaq composite index, which holds many technology stocks, is down 4.78 percent.
For the year to date, the Dow is down 16 percent, the S&P 500 is down 17 percent and the Nasdaq is down 18 percent.
With worries about the health of the economy traders wagered that value stocks would perform better than growth stocks. Growth funds invest in companies likely to increase earnings and revenue but often don’t pay big dividends like value funds.
“Value came back into vogue,” Roseen said. “People are going ‘You know what? If it’s going to be a rough time at least I’m going to get some dividends,’ ” he said.
Diversified U.S. stock funds showed negative returns of 6.34 percent for the quarter and 15.8 percent year to date.
Sector-equity funds had an overall negative return of 8.29 percent for the quarter and 14.9 percent year to date.
World equity funds had a negative return of 15.5 percent for the period and 25.4 percent so far this year.